U.S. dollar mixed, Aussie defensive ahead of RBA
| Reuters

SYDNEY The dollar nursed losses against the yen and euro early on Tuesday, but held onto gains versus the Australian, Canadian and New Zealand currencies which succumbed to weakness in commodity prices.

The Aussie was hit particularly hard as investors turned defensive ahead of a policy review by the Reserve Bank of Australia (RBA), which is under growing pressure to temper the currency's strength.

"Interest will be on the RBA's comments regarding the latest AUD appreciation," said Joseph Capurso, senior currency strategist at Commonwealth Bank.

The Aussie surged more than 7 percent last month - its biggest in over four years - to a high not seen since mid-2015. It has since retreated to $0.7600 AUD=D4, from the high of $0.7723.

The Aussie's rally in part reflected a broadly declining greenback as the head of the Federal Reserve signalled caution in tightening policy.

Fed funds futures <0#FF:> now have barely one rate hike priced in for this year. Unsurprisingly, the dollar has struggled against that backdrop.

Yet Boston Fed President Eric Rosengren on Monday warned that the interest rate futures market could be "too pessimistic", noting external risks to the U.S. economy seemed to be abating.

The dollar index .DXY was last at 94.510, back near a 5-1/2 month trough of 94.319 set on Thursday. Against the yen, the greenback bought 111.31 JPY=, having touched a two-week low of 111.10.

The euro was at $1.1388 EUR=, not far from Thursday's 5-1/2 month peak of $1.1438. It was softer against the yen, sliding as far as 126.455 EURJPY=R, before drifting back to 126.80.

Traders said a lacklustre session on Wall Street played a part in helping underpin the safe-haven yen.

There is little in the way of major economic data out of Asia on Tuesday, leaving the focus squarely on the RBA.

(Editing by Shri Navaratnam)

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